Burton Mills - Trade Pact Hinders China Trade Deal
Burton Mills analysts say China could face isolation from global trade market due to US trade deal provisions.
TAIPEI CITY, Taiwan, October 4, 2018 (Newswire.com) - Analysts at Burton Mills say China's plans to establish a free-trade deal with Canada and Mexico were thrown a curveball by a clause in the new US Mexico Canada trade pact that prevents such trade deals with "non-market" nations.
The clause states that if any of the existing members of the North American Free Trade Agreement (NAFTA) agrees to a free-trade deal with a non-market nation, the remaining members have the option to quit NAFTA and establish their own independent bilateral trade agreement.
The NAFTA provision has sparked controversy in Canada, but Burton Mills analysts say it is in keeping with US President Donald Trump's attempts to prevent China from utilizing Mexico and Canada as a way to export products tariff-free to the US.
China and the US are trapped in an escalating trade war that has led to the imposition of progressively severe import tariffs on both sides.
Burton Mills analysts say that under the provisions of the updated NAFTA which was recently renamed the US-Mexico-Canada Agreement (USMCA), any country wanting to enter trade discussions with any non-market countries must inform the other members at least 3 months prior to entering into trade negotiations.
Analysts at Burton Mills say the USMCA clause gives President Trump the opportunity to oppose any potential trade deal between China and Canada or Mexico.
If the clause were to be replicated in similar negotiations and deals between the US and countries like Japan and members of the European Union, it could go a long way to isolating China from the global trade market.
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Source: Burton Mills